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2009 Water and Wastewater
Rate Study and Financial Forecast
Council Presentation
City of CottonwoodCity of Cottonwood
July 2009
Presentation Format
Background on Rates
Forecast Volumes and Revenue Requirements
Proposed Rate Plan
Next Steps
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Facts about Water/WW Ratesin the 21st Century
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Average utility has been increasing rates 5-6% per year; trend expected to continue
Rate adjustments primarily due to reasons beyond utility’s control:
Inflation
system replacement
30-40% of utilities currently charge rates that do not cover their costs
General rule: a utility can have low rates or high quality service but NOT both!
CottonwoodCurrent Water/WW Rate Structure
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Current Water Rates Current Wastewater Rates
Monthly Service Charge: Residential
5/8" Meter $17.00 Monthly Service Chg $16.75
1" Meter 28.00
1 1/2" Meter 57.00 Multi-Residential
2" Meter 90.00 Monthly Service Chg (Per Unit) 16.75
3" Meter 180.00
4" Meter 280.00 Commercial
6" Meter 570.00 Monthly Service Chg* 16.75
Monthly Residential Consumption Rate per 1,000 Gallons: Commercial Usage Charge
1001 - 10,000 2.90 Per 1,000 Gallons 2.60
10,001 - 20,000 4.06
Over 20,000 5.68
*Includes $3.75 Admin Fee
Monthly Residential Charges10,000 Gal Water, 5,000 Gal WW
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$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
Cot
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Win
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ow
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Sed
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Source: WIFA 2007 Survey * Operated by the AZ Water Company ** Winter Water Rates NOTE: excludes resource development fee
Test Year & Forecast Annual New Water Accounts2009 -- 2018
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25
150
223219214200200
100
75
50
-
50
100
150
200
250
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total 2009 = 9,153Total 2018 = 10,584
Test Year & Forecast Annual New WW Accounts2009 -- 2018
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16
79
2632
53
117 117 117 117 117
-
20
40
60
80
100
120
140
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total 2009 = 5,412*Total 2018 = 6,187*
* Multi-family counted per unit
10 Year Cost of Service ForecastPrimary Assumptions
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Growth stays slow until 2012, eventually returning to previous levels
Most personnel and operating expenses will increase 3-5% per year
Some expenses (insurance/energy) will increase at higher rates
Certain expenses will increase with volume and customer growth (electricity/chemicals)
Most significant impact on rates – how to fund capital improvement plan
Capital Improvement Plan2009 -- 2018
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Cost WATERNew Utility Building $700,000 Well 1 and 2 Improvements 450,000 Well 4 and 7 Improvements 750,000 Well 8 and 9 Improvements 750,000 Highway 260 Well 1,500,000 Verde Village Well Improvements 1,110,000 Highway 89A Waterline Crossings 600,000 Pine Shadows Waterline 500,000 VSF Well 75,000 Hospital Well 150,000 State Land Well 560,000 Valves 1,000,000 Wells 1,500,000 Storage 400,000 Booster Pumping 1,000,000 Vehicle Replacement 50,000 Reserve for Future Projects 3,500,000 Total Water 14,595,000
WASTEWATERNew Utility Building $300,000 City of Cottonwood WWTP Improvements 1,961,000 Riverfront Water Reclamation Facility 5,500,000
WW Equalization & Conveyance Infrastructure - Arsenic Treatment Backwash 385,000 Reserve for Future Projects 3,000,000 Total Water 11,146,000
TOTAL CIP 25,741,000
Residential Rate RecommendationWater/WW Adjustments
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Effective Effective Effective Effective EffectiveAug Jan Jan Jan Jan
Current 2009 2010 2011 2012 2013Water Rates
Water Resource Development $4.98 $5.38 $5.81 $6.27 $6.43 $6.59
Minimum Charge -- 5/8" 17.00 18.36 19.83 21.42 21.95 22.50
Volume Charge1,001 10,000 2.90 3.13 3.38 3.65 3.74 3.84
10,001 20,000 4.06 4.38 4.74 5.11 5.24 5.37
20,001 Above 5.68 6.13 6.63 7.16 7.33 7.52
WW RatesMonthly Charge 16.75 20.33 23.00 25.00 25.63 26.27
Rate RecommendationImpact on Monthly Bills
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Effective Effective Effective Effective EffectiveAug Jan Jan Jan Jan
Current 2009 2010 2011 2012 2013
5,000 Gallons $50.33 $56.60 $62.17 $67.30 $68.98 $70.71 Increase 6.27 5.57 5.13 1.68 1.72
10,000 Gallons 64.83 72.26 79.08 85.57 87.71 89.90 Increase 7.43 6.82 6.49 2.14 2.19
30,000 Gallons 162.23 177.45 192.69 208.26 213.47 218.81 Increase 15.22 15.24 15.58 5.21 5.34
Comparison of Current Rate Planto 2005 Rate Plan
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Effective Effective Effective Effective Effective EffectiveCurrent Nov-07 Aug-09 Jan-10 Jan-11 Jan-12 Jan-13
2005 Rate Plan
Min Chg 5/8" $17.00 $20.40 n/c n/c n/c $22.00 n/c
Volume Chg: 1 1/2" 57 2.90 3.48 n/c n/c n/c 3.76 n/c
2" 90 4.06 4.87 n/c n/c n/c 5.26 n/c 3" 180 5.68 6.82 n/c n/c n/c 7.37 n/c
Current Rate Plan
Min Chg 5/8" $17.00 $17.00 $18.36 $19.83 $21.42 $21.95 $22.50
Volume Chg: 1,001 10,000 2.90 2.90 3.13 3.38 3.65 3.74 3.84
10,001 20,000 4.06 4.06 4.38 4.74 5.11 5.24 5.37 20,001 Above 5.68 5.68 6.13 6.63 7.16 7.33 7.52
Presentation Summary
Rate adjustments are required to fund CIP and to meet increasing costs over next decade
Rate plan is designed to minimize impact on ratepayers while ensuring utility remains financially solvent
Average water and ww utility increasing rates 5-6% per year
For most residential ratepayers rate plan requires initial increase of $6-$7 per month
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